Supplier Standard No. 1: What the Changes Mean for You

On Aug. 27, the Centers for Medicare and Medicaid Services published a final rule on Medicare enrollment standards for DMEPOS providers. The new rule expands on existing standards that providers must meet to establish and maintain billing privileges in the Medicare program—and they become effective Sept. 27 (next Monday). In a special series for HomeCare Monday, health care attorney Neil Caesar, president of the Health Law Center, Greenville, S.C., will provide clarification and insight on several of the new standards. This week, Caesar’s comments are directed toward Standard No. 1 (licensure).

Under the revised Supplier Standard No. 1, suppliers can’t subcontract with a third party to provide services if the state requires those services to be “licensed.” For example, if a supplier is in a state that requires a licensed respiratory therapist, the supplier may not contract with an independent therapist or outside agency. Instead, home care providers must employ the respiratory therapist—full time or part time.

It used to be that suppliers would be able to use somebody as needed, but CMS has now made it clear that they do not want providers contracting these services out. Specifically, it has to be a W2 relationship if the state requires the licensure. However, CMS will allow a locums tenens (fill-in) contract with non-employed licensed caregivers for short-term needs, such as a therapist’s vacation.

In those states that don’t require licensure, suppliers still have the ability to pick and choose. They can use the licensed person—or not—and if they do, it can be via contract or actual employment. You are also safe if your state requires licensure but explicitly allows a supplier to subcontract for the licensed services with outside licensed personnel. Finally, note that the licensure employment rule will not apply to subcontracts under competitive bidding with suppliers who utilize licensed personnel. (CMS, however, states that it is allowing these contracts “on a phase-in basis.” This phrasing certainly needs clarification.)

The more difficult aspects of this rule are somewhat mitigated by the fact that you certainly may have part-time employment, per-diem employment, and things of that nature. There are going to be tax issues with employment, and sometimes the people who would have been available by contract are not necessarily going to be available as W2 employees.

There may also be problems in rural areas and even in some cities. In this case, it comes down to available bodies. There are not necessarily a whole lot of independent respiratory therapists around. Many of those who are around are going to be in situations where they are not going to be able to be a part-time employee for one or more suppliers.

As to the why of this new standard, CMS states that it is looking to improve continuity of care so that someone who does the initial work-up is more likely to be the person who stays with the customer for certain aspects of the relationship. This reasoning is somewhat strained, because part-time employment is permitted even though the part-time status could lead to the same continuity of care problem. CMS officials also say they worry about fraud, but I don’t really see where the fraud issue comes up; certainly they could have monitored fraud without the employment requirement.

Primarily though, CMS’ stated reason for this change is simply to ensure that suppliers comply with state law.

All of this is certainly going to require a change on the part of providers, and it may create hardship for some. On the optimistic side, it is not necessarily going to be a major problem but more likely a hassle. Ultimately, this hassle could result in access problems for certain suppliers in certain locations where volume and need is just not enough to attract licensed personnel. It is going to be less of a problem for suppliers who have contracted out but who have enough business to warrant full-time employees.

There is also at least one unresolved question with the revised standard: The standard focuses on state “licensure” requirements, but in several places in CMS’ commentary to the revisions, CMS includes in its discussion statements that personnel who are “certified” under state law, but not licensed, also must be compliant with this standard. CMS needs to clarify whether the employment requirement applies to licensure (as is stated), or to more than just licensure (certification, for example).

Read the final rule, titled “Medicare Program; establishing Additional Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Enrollment Safeguards” (CMS-6036-F) in the Federal Register.

Neil B. Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting and the author of the Home Care Compliance Answer Book. You can reach him at 864/676-9075 or [email protected].